The Indian rupee opened weaker on Friday, as rising oil prices revive a key source of pressure and surging US yields bolster the dollar. The external backdrop is turning less favourable for the rupee, which has now faced resistance at the 94-per-dollar mark for three straight sessions. Brent crude, which had fallen below $90 a barrel earlier this week, climbed to $96, after fresh attacks on Saudi energy infrastructure and disruptions to shipping through the Strait of Hormuz. Meanwhile, the 10-year US Treasury yield rose well above the 5% mark after President Donald Trump said the United States did not need a deal with Iran. US Treasury yields have climbed sharply in recent sessions after higher-than-expected US inflation data ?strengthened expectations of further Federal Reserve rate hikes. The worries over oil prices and US Treasury yields come at a time when the rupee's recovery is already facing resistance. Thursday's session offered evidence of that, with the currency climbing to an intraday high of 93.60 before coming under pressure and slipping past the 94-per-dollar mark. The dollar held near a 19-month high on Friday after a strong week of gains on rising bets of ?a larger Federal Reserve rate hike, pushing the Japanese yen back near the key 160 mark that has left traders on alert for intervention. Treasury yields rose after US President Donald Trump said the US does not need a deal with Iran and as traders weighed the chance of a larger-than-usual Federal Reserve rate hike next month. Two-year Treasury yields gained 34 basis points over the past two sessions, the sharpest two-day rise in 3-1/2 years. The euro dropped 0.1% to $1.1049, hovering near its lowest level against the dollar since April 2025. For the week, it was down 0.8%, on track for its largest weekly loss since late September. The Japanese yen was largely unchanged at 159.875 per dollar, near its lowest level since early September, fuelling intervention concerns. Japanese Finance Minister Satsuki Katayama said on Friday that the government will respond appropriately to currency volatility as the yen briefly hit the key 160-per-dollar line on Thursday. The dollar index , which measures the greenback against a basket of currencies, was last down 0.05% at 103.17, remaining at its highest since April 2025. The Australian dollar has fallen about 2.5% over the past month, making it the worst-performing G10 currency against the greenback and the only one where rate cuts are being priced in for next year. It was last at $0.68 in early trading. The dollar was largely steady against the Swiss franc at 0.835, hovering near a one-month high. Oil prices were mixed on Friday, but set for their second weekly decline, as the US plans to continue its Iranian blockade, reducing the chance of renewed large-scale fighting that could disrupt Middle East supplies, though attacks on shipping remain a danger. Brent futures were ?little changed, down 1 cent at $95.41 a barrel at 0242 GMT. West Texas Intermediate (WTI) declined by 20 cents, or 0.25%, to $88.52 a barrel.
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The euro rebounded on Tuesday and was on pace for its strongest move higher in a month after falling to its lowest in 17 months in the prior day, as a pullback in French government bond yields cooled fears about strain in euro zone debt markets. The euro zone's currency climbed 0.28%, on track for its biggest daily gain since September 3, at $1.1252. the currency had slid to its lowest since May 2025 on Monday at $1.116, following a drop of more than 1% in the prior week, its fourth straight weekly decline. The dollar index , which measures the greenback against a basket of currencies, fell 0.26% to 101.89 and was on pace for its biggest daily drop since September 25. Bond markets around the world have seen yields rise due to expectations of sharp central bank rate hikes as energy prices have jumped due to the US-Israeli war with Iran and fanned inflation, as well as concerns about government finances. France is at the heart of the European market concerns. The French government is seeking to enact an unpopular 2027 budget to lower its deficit and contain its record-high debt load, a tall order in a deeply divided parliament as political factions position ahead of next year's presidential election. With inflation already rising on soaring energy costs and higher yields increasing household and corporate borrowing costs, further euro weakening could leave the European Central Bank caught between fighting inflation and calming bond markets.
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